Category: Church Governance

The “Waring Blender”

The song Poor, Poor Pitiful Me, lyrics by Warren Zevon, and sung by Linda Ronstadt and covered later by Terri Clark related the woes of a woman that lacked mate picking skills:

Well I met a man out in Hollywood

Now I ain’t naming names

Well he really worked me over good

Just like Jesse James

Yes he really worked me over good

He was a credit to his gender

Put me through some changes Lord

Sort of like a Waring blender

Churches with poor pastor picking skills suffer similarly.  Churches, no matter how small, that do not generally follow their governance documents, typically corporate bylaws, experience similar woes.

In Iglesia Pentecostal Filadelfia, Inc. v Rodriquez, Slip Op. (Tex. App. 13th, 2021), the trial court dismissed the case because it could not tell who was in governing control of the church.  A warranty deed clearly indicated the church owned the church property.  But, the failure to follow the bylaws in electing governing board members, officers and pastors left the Court with no means to determine who was in charge.  The Ecclesiastical Abstention Doctrine, the court held, precluded the court from resolving the dispute in the absence of a record.  The pastor even admitted he had been unaware of the existence of any bylaws until the lawsuit was filed in 2018 even though the church was founded and incorporated in 1987 by his parents.  The appellate court affirmed.

The only solution for a church in such a situation is to hold a congregational meeting, elect a new board, and document its decision.  The documentation probably would need to be a resolution accompanied by a signature by every voting member of the church.  Adopting a formal church membership roll in the same manner might be required to allow verification of the congregational vote.  Any church, no matter how large or small, that does not document its governance consistent with its governing documents at least to some extent risks losing control of its property, its assets and its funds to a faction or even an interloper.  Such documentation is simple, freely available on the internet or other sources, and need be updated only a few times a year.  An official copy should be kept at the church offices and a digital copy off site.  The digital copy should be updated at least annually.

SEPARATE BUT NOT EQUAL

In a denomination (or a rose by any other name…conference, fellowship, or whatever word is used), the governing documents will determine the relationship between the denomination and the local church.  Typically, in most states, the practice generally is that both the denomination and the local church are separate non-profit corporations.  In some states, the local church may be an unincorporated association, which is also a type of legal entity.  However, the governing documents of the denomination, and maybe, too, the local church regardless of its form, may make the local church a type of “trustee” holding its property for the benefit of the denomination.  In such organizations, if the local church dissolves or departs from the denomination, the title to property reverts to the denomination.  In other words, the denomination and the local church may be separate entities but not necessarily equal.

In Church Mutual Insurance Company v Guideone Specialty Mutual Insurance Company, Slip Op. (Cal. App. 2021), the local church ceased to exist and the property reverted to the denomination pursuant to the denominational governing documents.  During the short interval while the property was, in effect, owned by both before the reverted title could be filed of record, the building was destroyed by fire.  The denomination’s insurer paid the loss but sought contribution, subrogation or indemnification by the insurer of the local church.  The trial denied the claim.  The appellate court affirmed the trial court.  The appellate court held that the denomination and the local church, as an unincorporated association, had an “agency relationship.”  But, that did not automatically make the two entities the same entity for insurance purposes, even if the denominational governing documents were cast in terms of “unity” of both.  In other words, too, the Church Mutual policy did not name the local church as an insured and the Guideone policy on the local church property did not name the denomination as an insured.  Thus, the denomination was not covered by both policies (and neither was the local church covered by both policies).

Just as the best practice is for the title of property to reflect a denomination’s reversionary interest, so too is it the best practice for the denomination to be named as an additional insured on the property insurance policy purchased by the local church.  Both practices are hard to install and police over time.  Denominations should work with their insurers to offer a “package” that contains such endorsements to their local churches.  Insurance purchases are typically an after thought both at the denominational and local church levels.  Thus, at both levels economies of scale through combined bargaining power are lost and higher premiums are habitually paid.

SUING THE RIGHT PERSON

This is sometimes harder than might be expected.  Lawyers instinctively seek to sue the deep pockets because most wrongdoers are gone, dead or insolvent.  In church cases, especially those arising from some sort of church split, the right defendant might not be the entity.  It might not be the oversight board members (regardless of their title).  It might not be the pastor or other religious leader.  Sometimes state non-profit law can guide the choice and sometimes only the church or denominational governing documents can point to the right defendant.

In Suleman v Zia, Slip Op. (NJ App 2021), the Plaintiffs and Defendants agreed to a stipulated court order that required membership applications be submitted by a date certain and that a general election of board members be held by a date certain.  147 timely submitted membership applications were submitted but no action was taken and no election was scheduled.  The Plaintiffs sought an order of the Court enforcing the stipulated order.  The trial court denied the request for an order of enforcement.  The defendants named in the court proceeding were not members of nor consisted of the Membership Committee charged with the duty to review the applications.  The Membership Committee and its members were not named as parties so no Court order could be enforced as to them.  The defendants were members of an oversight board that had no control over the Membership Committee and apparently could not bind it to any agreement or order.

While it is possible the defendants in the reported case innocently thought they had authority to agree to a stipulated court order, it is equally possible the defendants knew they did not have authority to commit the Membership Committee to anything and for tactical reasons remained silent.  In either case, the Plaintiffs and their counsel should have obtained proof of the defendants’ authority to bind the Membership Committee to the stipulated order.  Defendants should not be selected based on emotions or conspiracy theories.  Church split litigation is usually an underfunded bad idea based on the heat of the moment, in any event, but it will be futile if the proper defendant is not before the court.

TOO MANY BYLAWS

Generally, the cases reported have demonstrated that churches that do not have governing documents, which are often called “bylaws” or other names, risk loss of control of their property, their assets, and their money.  Of course, churches that have governing documents, whether they call them “bylaws” or something else, must maintain the documents so that the governing documents match the governing beliefs and governance techniques used by each generation of church leadership.

In Nation Ford Baptist Church v Davis, 2021-NCCOA-528 (NC App. 2021), in an employment dispute between the “Senior Pastor” and the “Elders,” even though the Defendant church employee admitted the matter was an “employment dispute,” the trial court did not dismiss the case.  The appellate court affirmed the trial court’s refusal to dismiss and remanded for further proceedings.  The trial court declined to dismiss because the “Senior Pastor” had a written employment agreement and the church had bylaws setting forth requirements for termination.  But, the church was initially unable to prove which bylaws controlled:  the original bylaws enacted by the church or the bylaws claimed to be in effect at the time of the termination.  If the termination was not consistent with the set of bylaws to be held in effect in further proceedings, then the “Senior Pastor” might be entitled to damages.  One of the sets of bylaws required termination by a congregational vote of 75% of the “members” and it was alleged no such congregational vote was taken.

The procedure to adopt new or amended bylaws should include meeting agendas, minutes reflecting action on agenda items, and a certification by the correctly identified official secretary of the church corporation, or other officer appropriate under law, that the bylaws are in effect.  Thus certified, the certified bylaws should be in the church corporate records as recognized and recorded in the minutes of the corporation.  This process should be repeatedly annually or bi-annually.  The dispute over which documents are the governing documents may require only application of Neutral Principles of Law.  If so, the Ministerial Exception nor the Ecclesiastical Abstention Doctrine are implicated in most courts.